Akamai Accelerates Its Earnings in Q3 2009
Akamai Q3 2009 – For the Record
- Revenue of $206.5 million, up 5 percent year-over-year beat estimates of $199.40M
- GAAP net income of $32.7 million, or $0.18 per diluted share, down 2 percent year-over-year
- Normalized net income of $70.8 million, or $0.38 per diluted share, down 5 percent year-over-year, but beat estimates of $0.35
- Cash flow from operations of $105.2 million, up 13 percent year-over-year
As I highlighted in my earnings preview Akamai traditionally under-promise and over-deliver, this results means Akamai has beaten consensus forecasts in 13 of the last 19 quarters. Though I won’t get too excited as let’s face it, who hasn’t beaten forecasts this quarter?
Guidance
Guidance topped analyst Q4 expectations of $0.39. Akamai expects earning to range between 39 cents and 41 cents per share in the fourth quarter of 2009.
Conference Call
Transcript Snips
- strong results show the early renewed traction in driving profitable volume growth
- Our new contract signings in the quarter were very encouraging, particularly with our newer value-added solution, continuing the trend we began to see in late Q2. We added 208 gross new customers in the quarter, the highest number we’ve seen in quite a while. We were particularly pleased with the quality of the signings, with over 50% of our new customers purchasing at least one value-added solution and over 75% of the dollar value coming from value-added solutions.
- Churn improved somewhat from Q2 but remained at higher than normal levels at above 5%
- Our consolidated ARPU, or average revenue per customer, was $22,700 for the quarter, roughly consistent with the second quarter and down 4% year over year.
- This marks our ninth straight quarter that cash gross margins [non-GAAP] have been in the range of 81% to 82%. [Note: My chart below is GAAP margins.]
- only about 1% to 2% of total video viewing in the home is done over the Internet, but that number is increasing and we believe it is poised to at least double and double again in the next few years.
Some Perspective
The following chart shows Akamai’s sales and GAAP margins for the last six years (2009 is only three quarters). Gross margins have dipped from their heady 80% levels of the mid naughties, yet Akamai have managed to improve their net margins over that time frame. Net margins dipped to 15.9% this quarter due to increased R&D and sales and marketing costs. Gross margins of 78% this quarter highlight that Akamai are continue to perform in what is now a highly competitive landscape.
With Akamai raising guidance for Q4 investors should expect analysts to raise their forecasts which often begets further strength in the share price.
Akamai future is bedazzled with opportunities. While CDN is now highly competitive the opportunities in value added services, video growth and cloud computing should enable Akamai to continue their growth for many years.
Related posts:
Leave your response!